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What's really behind wasteful contracts?

In its Aug. 31 final report, the Commission on Wartime Contracting raised a number of important questions about project planning, coordination, oversight, and the importance of organizational and human capital strategies.

But its two most resonant messages were the substantial waste the commission suggests (as much as 20 percent of the total $200 billion in expenditures) and its conclusion that there was an “over-reliance” on contractors. Given the centrality of these issues to future U.S. contingency operations, both deserve additional discussion.

With regard to waste, there can be no doubt that the issues identified are real and should be of concern. That said, as the U.S. comptroller general testified a few years ago, the term “waste” has multiple meanings and causes. While no waste is desirable, some waste clearly results from poor agency planning and execution. But in a contingency environment especially, other “waste” is often driven by the messy realities of the environment itself. Unfortunately, this critical distinction is inadequately addressed in the report.

For example, the report chides the government for flying supplies into Afghanistan using substantial numbers of security personnel, and for sustaining work crews for projects like the Kajaki Dam in Afghanistan. Missing from the commission’s discussion is any acknowledgement of the difficulty, if not impossibility, of using overland transportation to move supplies across Afghanistan; the threat environment that drove the security requirements; or the lack of alternatives to providing life support for the workforce involved.

While some efficiencies could, and possibly should, have been executed, the dynamics of the environment inevitably drove less than optimal solutions. Similarly, there have been numerous circumstances where security concerns or other factors unrelated to a given project impacted project timelines, implementation and costs.

Wasteful? Perhaps. But not necessarily in the way the commission portrays it.

A similar dichotomy exists with regard to the commission’s conclusion about an over-reliance on contractors. The report appropriately identifies shortfalls in the numbers of government personnel with the right skills in the war zone, leading to cases in which contractors performed some functions that, in more benign circumstances, should have been performed by federal employees. Yet, the report’s focus on an “over-reliance” on contractors misconstrues the issue.

To the extent the commission was focused on the core human capital requirements to support a contingency operation (i.e., acquisition and related capabilities), there may well have been some “over-reliance” on contractors. The Gansler Commission, among others, spoke eloquently to this challenge in its 2008 report.

But this commission went further, challenging the use of contractors more broadly and even prescribing specific workforce ratios and structures. Hence, while the report acknowledged that future contingency operations of this scale will continue to require substantial contractor support, and even recognizes that in most cases the cost of contracted support is less than the alternatives, it also sends a strong, broader message that overall contract support can and should be minimized.

However, the real issue is not the number of contractors — which is driven by the nature and scope of an operation (and Iraq and Afghanistan are huge by any measure) — but rather the lack of attention given to the government infrastructure needed to effectively award and manage contracted operations.

Workforce balance will necessarily be driven by a variety of factors, including both the scope of inherently governmental functions involved and the cost and viability of creating permanent government positions to support unknown and uncertain future contingencies. Therefore, our focus should be on strategically addressing the government’s capabilities, rather than preconceived or arbitrary numbers or ratios.

No objective assessment of contingency and reconstruction activities in Afghanistan and Iraq can deny the evident problems, whether they involve contractors, non-governmental organizations, or the government itself.

But effectively addressing these challenges in the future requires that we recognize the unique and constantly changing demands of a contingency environment, the differences between contingency and “routine” sustainment, and more.

From that perspective, the commission’s report comes up short. But that’s why the report’s conclusions are called recommendations. By definition, they merit much additional discussion.

About the Author

Stan Soloway is a former deputy undersecretary of Defense and former president and chief executive officer of the Professional Services Council. He is now the CEO of Celero Strategies.

Reader Comments

Sat, Oct 29, 2011
Niko

Stanley's a stand-up fella, as smart and patriotic as anyone in the acquisition arena. However, he seems to want to entirely lay the waste (and fraud and abuse??) charge off on the customers. That is nuts. And you can hardly tell Feds and contractors apart. And just think, peace lovers everywhere, contractors can offer a never-ending labor supply to make up for the troops we do not have. This fuels the foolish adventures of boneheads like our last president, and all the chicken-hawks out there. The military and the contractors need to understand that the majority of the Americans do not think what our country has wrought in Iraq and Afghanistan, for the most part, is keeping us safe. And for the contractors, it is just another job.

Tue, Oct 18, 2011
Niko Barotski

Mr. Soloway says, in so many words: wars are messy and supporting them is inherently wasteful. So don't blame the contractors. Certainly military leaders believe they are entitled to as much money as they want, and don't like being accused of waste. After all, they might say, "If we can't waste, people will die." Contractors can't get away with this BS. Further, they price in a predatory, greedy way, and allow themselves to be as sloppy as the military. Finally, they take on entire missions and tasks that are obviously wasteful. Contractors think it is ok because the government wants them to waste. Well, it is not. Contractors need to be squeezed, surveilled and penalized for waste. Like the military, they have no entitlement to the almighty buck.

Tue, Oct 18, 2011
KRL

...and how many of the people on the commission had actual, extended experience in Iraq and Afganistan with the responsibility for overcoming obstacles and making things happen? It is easy to be Monday Morning quarterback when you are safe and secure in your own home. GREAT ARTICLE STAN!

Mon, Oct 17, 2011
Garth A
Tampa, FL

Thanks again, Stan for critiquing things in our industry such as these short-sighted recommendations. Using an oblique phrase such as "over reliance on contractors" shows that the commission lacked the foresight, courage, or capability to make stronger recommendations about systemic problems in the Government. The DoD during the 90s chose to reduce military and civilian capabilities in a variety of areas leaving only contractors to fulfill these roles during a contingency. The alternative to "over reliance of contractors" is to have standing forces during non-contingency periods ready for the next crisis. In a time of reduced federal budgets, keeping forces standing by for the next unknown event is not feasible. When the next crisis happens, the DoD will need to rely upon contractors again. While that might be more expensive at the time, the net effect will be to save taxpayers significantly over the long term. Contractors are the best means to surge during contingency operations and keep our military focused on what they do best.

Mon, Oct 17, 2011
JK

Another good reason to quickly get out of Afghanistan and bring our money home where it can be spent here to create jobs in America.

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